What establishes ethical standards for an organization to follow in its practices?

The establishment of ethical standards within an organization is fundamentally rooted in ethics policies. These policies serve as a framework that outlines the organization’s values, principles, and expectations regarding ethical behavior. By providing specific guidelines on how employees should conduct themselves in various situations, ethics policies help create a culture of integrity and accountability. They address key topics such as conflict of interest, discrimination, harassment, and reporting unethical behavior, thereby guiding employees towards making decisions that align with the organization’s ethical standards.

While corporate governance plays a significant role in defining the structures and processes for decision-making and accountability within an organization, it encompasses broader systems of oversight rather than specific ethical guidelines. Compliance regulations are important for ensuring that organizations adhere to legal standards, but they do not inherently address the ethical nuances that ethics policies are designed to cover. Employee codes of conduct certainly contribute to promoting ethical behavior as well, but they are often derived from the overarching ethics policies that provide the necessary context and framework. Therefore, ethics policies are fundamental in establishing a clear set of ethical standards for the organization to follow.